Byju’s insolvency: Brothers move court to keep creditors away from ₹158 cr settlement

The suspended directors of embattled edtech firm Byju’s have approached the bankruptcy appeals court to prevent its creditors from deciding on a ₹158 crore settlement with India’s cricket board.

Byju’s Committee of Creditors (CoC) includes opposing lenders US-based Glas Trust Llc. and Aditya Birla Finance.

Riju Raveendran, a former director of Byju’s and younger brother of founder Byju Raveendran, argued before the National Company Law Appellate Tribunal (NCLAT) on Wednesday that the settlement with the Board of Control for Cricket in India (BCCI) had been finalized before the CoC was constituted.

The Bengaluru bench of the National Company Law Tribunal (NCLT) had on 10 February directed BCCI to submit the ₹158 crore settlement plea to the CoC for approval to facilitate Byju’s exit from insolvency. 

Byju’s lenders, including Glas Trust, have opposed the settlement, terming the ₹158 crore involved as “tainted money” and asserting their right to be paid first as creditors. 

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If NCLAT rules that the settlement had been decided before the CoC was formed, Byju’s will exit insolvency and the management of the edtech firm will return to Byju Raveendran. However, if the matter stays with the CoC, the company will need to secure approval from the committee, which is dominated by opposing lenders.

Currently, Glas Trust dominates the CoC, holding a 99.41% voting share due to its ₹11,432 crore claim. Other creditors include Aditya Birla Finance with a ₹47 crore claim (0.41% voting share) and Incred Financial Services Ltd with a ₹20 crore claim (0.18% voting share).

NCLAT has agreed to hear his plea. The next hearing is scheduled for 3 March.

Byju’s insolvency tangle

The CoC has proposed the appointment of EY’s Shailendra Ajmera, the former resolution professional of bankrupt airline Go First, as the new insolvency expert to manage Byju’s affairs. 

This comes after NCLT in January decided that resolution professional Pankaj Shrivastava was unfit to oversee Byju’s insolvency process. It had also directed that the reconstitution of the CoC on 31 August 2024 be cancelled, and the erstwhile CoC from 21 August 2024 be retained.

Byju’s insolvency proceedings began on 16 June, 2024 after the company defaulted on a ₹158 crore payment to BCCI under a sponsorship agreement. Byju’s had secured jersey sponsorship rights for the Indian cricket team in 2019, extending the contract until November 2023. However, financial struggles led to missed payments, prompting BCCI to initiate insolvency proceedings.

Both parties later sought a court-approved settlement, but NCLT did not issue an order, forcing Byju to escalate the matter to the NCLAT in Chennai.

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On 2 August , 2024 NCLAT dismissed Byju’s insolvency case and approved BCCI’s settlement after Riju Raveendran raised ₹158 crore to clear the dues, temporarily restoring his family’s control over Byju’s operations.

However, Glas Trust challenged the settlement in the Supreme Court, arguing that the funds should be allocated to financial creditors rather than BCCI. 

On 23 October, the Supreme Court quashed the NCLAT order, ruling that it had bypassed due process under the Insolvency and Bankruptcy Code (IBC). The apex court directed both parties to return to the NCLT for fresh proceedings.

Byju Raveendran currently resides in Dubai and Riju in London.

Founded in 2011 by Byju Raveendran and Divya Gokulnath, Byju’s became India’s most valuable ed-tech startup, achieving unicorn status and attracting global investors. However, its aggressive expansion led to financial strain, regulatory scrutiny, and mounting disputes with creditors, marking a dramatic downfall for what was once among India’s most celebrated startups.

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